Should Developers Have More Rights Than Cities? They Just Might, if New State Legislation Passes

Cari Wade Gervin

9:28 AM, Apr 10, 2013

It's no surprise that the Tennessee state Legislature often favors developers. It's also no shock that the current Legislature is apt to pass bills without fully thinking about the consequences. But if legislation introduced by Strawberry Plains' state Sen. Frank Niceley and Rep. Curry Todd (R-Collierville) and championed by the Home Builders Association of Tennessee passes, there could be a lot of consequences—rather bad ones, according to city planners.

The bill, HB 964/SB 915, would make it so that whatever development regulations are in effect in a given municipality on the date a building permit is submitted are the regulations that would pertain to construction—even if the regulations later change before the construction starts.

For example, say a developer wants to build out a big new subdivision in Farragut, the kind of development that would take several years to finish. The city approves the plans, and construction begins. Then, two years later, Farragut decides to change its development regulations to require all subdivisions to have sidewalks. Since the city accepted the plans back in April of 2013, the developer would get to abide by the old regulations that don't require sidewalks, even though this is new construction.

That's what the developers say this is all about—that once they're committed to building something, it's not fair for the rules to change midway through the project. And in a situation as described above, it might not be that big a deal. But what if, after severe issues with runoff, Farragut decides to adopt more stringent stormwater management protections, changing the way parking lots need to be constructed? If a developer had submitted a plan three years ago for a big strip mall with a lot of asphalt but then lost some money and held off on building anything, he wouldn't have to conform to the increased environmental protections when he finally gets around to building the development next year, all because of this new law.

As of right now, when this kind of stuff happens, the developers' only option, they say, is to take it to court. But, according to local planners, this bill would actually make it harder—and more expensive—for both planners and developers to do their jobs.

At a House hearing on the bill last week, Doug Sloane, the deputy director of the Nashville Metropolitan Planning Commission, said that the city would be forced to require developers to submit full engineering plans for any site at the time of what is now just a basic plat submission, which would disproportionately hurt smaller developers.

"This is way too broad a stroke to try to accomplish this," Sloane said.

The Knoxville-Knox County Metropolitan Planning Commission's Mark Donaldson agrees. In an e-mail, he lays out numerous problems with the legislation. "It interferes with local governments' ability to govern themselves," Donaldson says.

Donaldson says the five-year vesting period is too long and "adds to the potential for an ‘unlevel playing field.'" He also points out that the time frame "is in conflict with the Knoxville-Knox County Subdivision Regulations, which have a two-year expiration on concept plans (our version of a preliminary plat). We expect the completion of a final plat within two years of concept plan approval; if not, the concept plan is no longer valid and must be resubmitted or an extension approved."

Donaldson adds that it is not practical for vesting to begin when a plan is submitted. "Vesting is often triggered by ‘significant' investment on the property rather than a approval of a plan," he writes. "In my opinion, the preparation of a concept or site plan does not rise to level of ‘significance' to warrant vesting. In many cases, developers have not even closed on the purchase of a property until the concept plan or site plan has been approved."

He also notes that the fiscal-impact summary for the legislation, which is estimated to be "not significant," is wrong.

"The impact would be felt by the city and county permit administrators who would have to keep a ‘rolling' record of every site plan and preliminary plat approval in order to know what standards would apply to which project as they become permitted. It would be an administrative headache and create the potential for many conflicts. For example, entire building codes are often changed more often than every five years," Donaldson says.

Knoxville Mayor Madeline Rogero has also come out against the bill. In a statement, she says, "Yes, we are opposed to the bill and share many of the same concerns as Mark Donaldson and the Metro Nashville government."

Knoxville Chamber of Commerce CEO Mike Edwards expressed interest in similar legislation being passed back in January, before the session started, but the Chamber has not, as of Tuesday, actually taken a position on this particular bill.

Todd said in the hearing last week that the only opposition he's come across is from people in Davidson County, but in fact, the Tennessee Municipal League itself is opposed. The TML represents cities of all sizes from across the state, from Oak Hill to McMinnville to Farragut to Memphis.

Gov. Bill Haslam said last week that he had not yet taken a position on the bill. "I actually don't know that much about it," Haslam said. "It's not one we've done our research on."

An amendment to the bill introduced last week would except any planning changes forced by the federal or state governments—minimal stormwater requirements, for example, are handed down by the Environmental Protection Agency. But planning advocates say the changes are too little, too late.

The legislation will be heard in both the House and the Senate on Wednesday. If it moves forward, it could reach the full floor next week.